California Insider

A Weblog by
Sacramento Bee Columnist Daniel Weintraub

May 30, 2003

A good one gets away

This news is a few days old, but still largely unreported in California: former Assemblyman Louis Caldera has been named president of the University of New Mexico. An El Paso native who was raised in Los Angeles County, Caldera is a West Point grad with an MBA and a law degree from Harvard. He left the Assembly in 1997 to take a job running Clinton’s national service operation and later became Secretary of the Army. He was always one of my favorite legislators because he was fiercely independent. He answered to his constituents and his conscience and, as far as I could tell, nothing else. He also had the guts to think of himself as a legislator who happened to be Latino, not a Latino lawmaker. While proud of his roots, he refused to see the world only through his ethnicity. I always thought he would have made a great governor or U.S. senator some day. At 47, he still might. But I’m increasingly doubtful that it’s going to be in California. This state desperately needs leaders with courage and vision. We can’t afford to let the few we have get away.

The more things change...

Contractors remodeling Ruth Holton’s Land Park home knocked down a wall and inside the lathe and plaster discovered a copy of the Sacramento Bee from March 6, 1939.

The lead headline reads:

Battle is Seen as Legislature is Reconvened
Olson Reiterates Intention to Press His Tax & General Appropriations Program

The article recounts Republican attacks on Democratic Gov. Culbert Olson’s budget proposal as too high and Olson’s retort that he had already slashed spending enough. The article also refers to fiscal hits on California from recent federal cutbacks and a fight for compulsory health insurance.

So for those of you who sometimes feel as if you've been fighting these battles all your lives, you're right, and then some.

May 29, 2003

The name game

David Gilliard, consultant to Darrell Issa’s Rescue California recall committee, says the price per signature is up to $1.40 -- thanks to the Davis forces’ move to pay for signatures on a legally meaningless petition opposing the recall. But he disputes my theory that the dueling petitions will lead to an all-out bidding war. “You have to remember,” Gilliard says, “that it’s a lot harder to gather signatures on a petition supporting Gray Davis. If someone can get 200 signatures on the recall petition in the same time they could get 25 on the Davis petition, which one are they going to circulate?” Good point.

Area woman makes good

Nicolle Devenish, the former Californian who’s been working in the White House regional press operation, will begin a new gig Monday as the communications director for President Bush’s reelection committee. Devenish cut her teeth in the state capitol as a press aide to then-Assembly Republican Leader Bill Leonard and worked briefly on Dan Lungren’s 1998 gubernatorial campaign. She was a casualty of that year's Republican debacle in California but landed on her feet, to say the least, becoming press secretary to Florida Gov. Jeb Bush. Devenish was working for Jeb when all hell broke loose in Florida during the November, 2000 vote count, and soon was spinning for W in front of the press mobs that converged in Dade County. She’s been in the White House ever since.

Feinstein condemns recall but doesn't rule out running

Sen. Dianne Feinstein has just sent a 400-word op-ed piece to California newspaper editors condemning the Davis recall campaign. She calls it “mean-spirited,” a waste of money, and a move that could result in a “fringe candidate” winning with a small percentage of the vote. What Difi doesn’t say in her piece is whether she would run if it qualifies. I asked that question of her spokesman, Howard Gantman, who replied:

“Sorry. This is her statement on the recall. She does not believe that the recall would be in the best interest of California.”

The omission is obviously glaring--and intentional. And at this point, I can only speculate that the piece was designed to let Feinstein take the high road while keeping her name in the mix as a possible successor to his Grayness.

May 28, 2003

The market for recall signatures

The thing to watch now in the battle over the Davis recall campaign is the bidding war for signatures. It was widely believed that Davis forces struck deals with the state’s major petition circulating firms to keep them out of the game earlier this spring. Now that recall proponents have found someone to do the job, and street workers to gather the names, Davis allies in organized labor are responding in kind. Their new committee – Taxpayers Against the Recall -- is going to be collecting signatures on a petition opposing the recall. The petitions have no standing under state law. But they are an excuse for the Davis forces to outbid the recall proponents for the services of the petition circulators. According to the Bee’s Margaret Talev, the pro-Davis committee will be paying $1 per signature – 25 cents more than the going rate paid last week by Rescue California, the best-financed of the pro-recall committees. If the strategy works, the recall proponents will find it more difficult to collect the names they need to place the question on the ballot. They’ll have to rely more heavily on volunteers and direct mail.

Federal windfall tempts lawmakers

The Legislature’s rush to spend California’s $2.4 billion share of the state aid approved by Congress last week ignores one thing: the money is a one-time windfall. Spending that money to continue or expand state programs will add to the already looming structural deficit between revenues and expenditures. Gov. Gray Davis estimates that the gap will stand at $8 billion next year even if the Legislature approves his proposal for the budget year that begins July 1. Using the federal money for ongoing programs would widen that chasm to more than $10 billion. Far better to dedicate it to one-time uses, perhaps even paying off a portion of the state’s accumulated deficit.

May 27, 2003

Under surveillance by the diversity cops

About a year ago the diversity police demanded that the UC Regents hire a Latino as the new chancellor at UC Riverside. They got their wish. The chancellor, France Cordova, is the daughter of a Mexican immigrant. But she is also an accomplished astrophysicist dedicated to turning the institution she serves into a top-notch university. And, sin of sins, she doesn’t think of herself as a Latina first, nor does she see her mission as serving the university’s large Latino population of students and faculty. All of which means trouble. The LA Times chronicles Cordova’s first year on the job and notes that she’s already hearing rumblings from diversity advocates concerned that she isn’t committed to their cause.

Armando Navarro, a professor of ethnic studies who led the campaign for a Latino chancellor, explains the prism through which Cordova will be judged:

"If at the end of three or four or five years, there's no difference in the numbers, with the leadership of Chancellor Cordova what does it mean? It means that even if you struggle to get someone in [the top position], it doesn't really make a difference. The reality of discrimination and exclusion continue."

Here's the reality: UC Riverside is already the most racially and ethnically diverse campus in the system, with the largest ethnic group, whites, representing just 23.1 percent of undergraduate enrollments as of the fall of 2002. Latinos and Chicanos combined account for 22.8 percent of the enrollment—and their numbers grew by 16 percent between 2001 and 2002. The campus is a miniature United Nations, with liberal sprinklings of Chinese, Japanese, Korean, Pakistani, African-American and American Indian students. Adding more Latinos, which presumably is what Mr. Navarro wants, would not make Riverside more diverse, it would simply make it more Latino.

Perhaps its time to declare “diversity victory” at UC Riverside and start counting some other numbers, like the number of graduates or the number of Nobel laureates on the faculty. That seems to be what Chancellor Cordova has in mind. Good for her.

Here's the link to the Times' story. Registration required. But you can use CaliforniaInsider as your log-on and insider as your password.

May 26, 2003

Trade agency's inflated claims

Kimberly Kindy of the Orange County Register, using old-fashioned reporting, has exposed widespread deception by the state Technology, Trade and Commerce Agency. Like many state programs, the agency routinely boasts that a dollar spent on its efforts – in this case foreign trade offices – will yield far more in benefits to the taxpayer. To back up its claim, the agency submitted lists of private business deals supposedly brokered by its offices on behalf of California-based companies. Kindy took the list of 191 “success stories” from 2000-2001 and started contacting them. Of the 58 business owners or managers who would talk to the paper, 31 said the state had little or nothing to do with the deals. Fourteen other companies acknowledged that the state played a role but said it was not pivotal. Six said the deals the state took credit for never even happened. Agency spokesmen say their errors were the result of misunderstandings, or of comments gathered from surveys with firms with which they’d dealt. But this blunder has all the looks of willful sloppiness. As the information moved up the chain of command from the trade offices to the agency secretary, there was no system for even spot-checking the claims for accuracy. Of course not. The more deals the agency could take credit for, the more it could expand its empire of trade offices, which in reality are little more than a system for governors to appoint state “ambassadors” to cushy jobs in foreign locales. The phony reports from Trade and Commerce certainly leave you wondering how many other state agencies are doctoring their data.

A note on Kindy, a disclosure, and a boast: As far as I know, Kindy remains the only reporter in the Capitol press corps assigned full-time to investigate the operations of state government. She began her assignment about three years ago, dedicated at first to covering the government agencies but not designated formally as a full-time investigative reporter. A few months later, when the Register revamped and strengthened its commitment to investigations throughout the paper, Kindy was given that role officially in the Capitol bureau. Since then, she has broken story after story on her beat and established herself as the top digger in the Capitol press corps. This past year she won the John Jacobs Award for enterprise reporting in the Capitol from the Center for California Studies at Cal State University Sacramento. Keep in mind that the Register has only three staffers in Sacramento. But the paper has dedicated one-third of its Capitol staff to delving into how state government is actually working, or not working, for the people of California. If every other paper in the state gave investigations as much weight, you would be reading stories like this one every week, if not every day. Now for the boast: Kindy began her current assignment shortly before I departed as her bureau chief at the Register to become a columnist for the Bee. I take zero credit for her success. But I do take pride in pushing the concept that every Capitol bureau, no matter what its size, should have at least one reporter doing nothing but investigations. As a reporter and later a bureau chief, I was always frustrated by how much time we all spent chasing the politicians around, often to little effect. The real stories, I thought, were buried deep (some not so deep) within the bowels of government. Kindy has shown what one dogged reporter with a focused assignment can accomplish. Let’s unleash 10 or 15 more just like her.

May 23, 2003

Issa up to $500,000 in recall campaign

Davis Recall proponent Darrell Issa is putting another $350,000 or so into the campaign, bringing the San Diego County congressman’s total contributions to date to about a half-million dollars, confirms David Gilliard, his campaign consultant. Gilliard says the cash infusion will pay for the mailing of 1 million pieces this weekend that will include recall petitions and a postage-paid envelope for returning the signed documents to the campaign. The mailings are going to households with at least two registered Republicans. Gilliard says he is hoping for a return rate of somewhere between 5 percent and 8 percent, with an average of more than 2 signatures per petition. There’s no way to independently confirm any of this, but I have dealt with Gilliard for many years and I have never known him to lie to me. I have no reason to suspect he is doing so now. That’s why I can only conclude that Issa is in this thing for real now, and if that’s the case, the recall is going to qualify. Brace yourselves. This one is not going to be for the weak of heart.

Indians might join recall movement

The hottest recall rumor of the moment is that California’s well-heeled Indian tribes are queuing up to contribute to the campaign to remove Gray Davis. That would guarantee it qualifies for the ballot and probably doom Davis to boot. My sources say it hasn’t happened yet. But it might. Recall consultant David Gilliard says his group has had discussions with at least some of the tribes but has yet to receive any money from any of the Indians. The mostly Northern California tribes represented by lawyer Howard Dickstein won’t be contributing. Dickstein told me the tribes he represents have done better under Davis than all the previous governors combined and they are not interested in toppling the governor. But others say another group of tribes based in Southern California is considering it. So far they haven’t returned my calls. A longtime Sacramento player with close ties to the Indians says he thinks they’ll join in if the recall organizers can first raise a campaign chest in the neighborhood of $1 million to prove they’re serious. Davis is hitting up the tribes for $680 million a year for the state treasury from their gambling operations. By spending a couple million to qualify the recall and perhaps $20 million on the candidate of their choice, they might be able to get out from under that obligation forever. Or perhaps just whispering about the prospect of joining the recall will be enough to persuade Davis to back away from his proposal to tax the tribes' gaming proceeds

Cost of state debt could build 35 schools

Some have suggested that state deficit hawks, myself included, are purists who pay more attention to accounting principles than to the needs of California residents. Isn’t it better, this line of reasoning goes, to provide health, education and other services to those who need them, and pay for them later, rather than cutting them now or raising taxes to pay for them, simply for the sake of a balanced budget? Today’s LA Times helps answer that question with a story placing the cost for the state’s latest round of borrowing at $272 million. That’s the interest and fees on the $11 billion the state needs to carry it through the summer. Enough, according to The Times, to build 35 schools or pay 5,000 teachers for a year. Here’s the fun part: about $100 million of that will go to Wall Street firms simply to vouch for the state’s credit, because without such insurance, nobody would buy our bonds. Wonderful. Here’s the link. Registration required. Use CaliforniaInsider as your sign-on and password insider.

May 22, 2003

CLAS revisited

Religious conservatives are mobilizing to defeat a bill moving through the state Assembly that would undo restrictions on student tests and questionnaires adopted after a controversial state exam was killed in 1994 amid protests from parents about its content. The CLAS test died in part because of a furor over questions that conservatives said forced students to reveal intimate feelings about themselves and their families. State law now prohibits schools from asking students about their “personal beliefs or practices in sex, morality, or religion” without permission from their parents. AB 661, by Berkeley Democrat Loni Hancock, would allow such questions if they were administered anonymously and if parents were first notified and didn’t object. Students could be asked anonymously about school safety, school violence or prohibited discrimination, including discrimination against gays, without the notification or consent of parents. Supporters say the bill is necessary to help schools fight violence and discrimination. Opponents say such questions represent an unwarranted intrusion into family life.

May 21, 2003

As the deficit turns

The gov was here last night for an editorial board meeting. Margaret Talev of the Bee’s capitol bureau did the newsstory. But her straight account can’t of course reflect the real spirit of the meeting, which I found depressing and frustrating. Davis began the meeting with a cheap shot at yours truly, pulling out a quote from a January column in which I said his revenue numbers might have been too pessimistic. As it turned out, his numbers were a tad high. But the real point of that column is as valid today as it was then, that Davis is overstating “projected spending” in order to take credit for budget cuts that don’t really exist. His feeble attempt to make me look bad in front of my colleagues left me wondering if that’s how he handles his negotiations with legislators. I know if he had asked for my vote after that petty display, I wouldn’t have given him the time of day.

Davis seems totally impotent at this point. He implored us to join him in beating up legislators of both parties to vote for his budget, which would borrow $17 billion and still not close the structural gap between revenues and spending. We asked him why he gave up on his January plan, which for all its faults at least was balanced. Because, he said, nobody liked it. But you never even fought for it, we said. Well, Davis replied, I was tied down at my desk for much of the spring working on the revised budget. We asked him what he would do to win passage of this version, and he said he was speaking to just about every interest group that would have him as they come through town. But beyond talking to editorial boards, he seemed to have no broader strategy for actually changing public opinion, explaining to people his view of the problem and his vision for getting us out of it. Which if I understand it is that the state has desires that go beyond its means, and we need to either raise taxes, cut spending or both to bring our books more in line with our wishes. Everything to him is an inside play. It’s all about lobbyists and interest groups and legislators. Even editorial boards, which he sees as a tool not to communicate with voters but with lawmakers, are part of the game. Very little connection to the bigger world out there.

Davis also assured us that once this budget-in-name-only was adopted, he and the Legislature would get right to work on closing that $8 billion gap that he’s already conceding would exist in the next budget. I find that very hard to believe. I’m beginning to think that as Republicans hold out against new taxes, and Democrats hold out against spending cuts, both sides will enable the other, and they will adopt a compromise budget that does neither. It would borrow to pay off the deficit and vow to “freeze” spending a year from now, which means nothing as a statement of intent. The governor would sign it, saying he has no other choice. Then they’ll all ignore the problem for another six months and see how big the next deficit grows, nudging the state just a bit closer to insolvency.

May 20, 2003

We gave at the office

Finance Director Steve Peace has been touting a theory of late that seeks to blame the federal government for much of California’s budget problems. A southern tilt in national politics, Peace says, has led to an “imbalance of payments” that makes California a big net donor to the other 49 states, via Washington. While I reserve the right to question the specifics of his numbers later, I’ll stipulate to them for the moment. But even if the numbers are accurate, the whole theory seems a rather odd one for any mainstream Democrat, even a centrist one like Peace, to be arguing. And it’s even sillier for some of the leftists in the Legislature who have also taken up the cause. Here’s why. If it’s wrong for California to be a “donor state” – that is, to send more tax dollars to Washington than come back in services and contracts – then presumably it’s also wrong for those states on the receiving end to get more than they give. And if that’s true, then the whole system of federal taxation comes into question. Why bother sending any tax dollars to Washington at all if all we are going to do is get the same amount back? Maybe for national defense, right? Or a handful of other things that the states could not do individually. But pretty soon you are describing basically a system where each state fends for itself. That’s a vision worth exploring, and one that would certainly delight the serious fiscal conservatives among us. But it hardly seems consistent with the core values of the Democratic Party. It also ignores the fact that California as we know it was essentially the creation of the federal government, and by extension, the other states in the union. Consider what the federal water project and the post-WW II defense boom did for California. I don't remember anyone tallying up tax flows in and out during those years.

On the other hand, Peace’s rant reminded me of a strange fact I discovered at a recent policy briefing that still puzzles me. It turns out that 90 percent of the federal gas tax we pay to support highway and transit construction must, by law, be returned to the state. The rule was adopted to ensure that every state was getting its fair share, that no one became an obvious example of a donor state. So first we send the money to Washington, then they decide how we ought to spend it, and they send it back, minus postage and handling. The other 10 percent, I guess, is spent on interstate highways and projects in other states. Does that seem odd to anyone besides me? If the feds are required by law to return 90 cents on every dollar, what's the point of sending it to them at all?

May 19, 2003

Fatal police chases

Police chases that kill innocent bystanders have long been an interest of mine, since I watched the Legislature in 1987 pass a law all but immunizing government agencies from lawsuits in such cases. I thought at the time that the law, which requires police departments to have policies on high-speed chases, but doesn't require their officers to follow the policies, might open the door to more fatalities. That seems to be what happened. Now my colleague Aurelio Rojas at the Sacramento Bee reports that state Sen. Gloria Romero is pushing a bill to require police agencies to show their chase guidelines were followed if they want to escape liability in the courtroom. The cops say this will inevitably lead them to discourage officers from beginning a chase in certain circumstances. I'm not sure if that is true. But I still think the better solution could be found on middle ground. Establish a fund that could be used to compensate the families of the victims without litigation. It won't necessarily reduce the deaths. But neither would it hinder legitimate police work or encourage questionable lawsuits. It would simply recognize that one price society pays for public safety is the injury or death of innocent bystanders. And when that happens, all of society, not just the victim's family, should share in that burden.

DiFi for governor?

Gray Davis and Dianne Feinstein have never been buds, but DiFi just might be Gray’s secret weapon in fending off the recall. Admirers of the moderate two-term U.S. Senator and former SF mayor are starting to discuss the possibility of Feinstein putting her name on the ballot if the recall qualifies. The move would make sense for Feinstein, who is California’s most popular politician and one who once longed to be governor. If she ran, she would almost certainly win against any opponent from either party, save perhaps the wildcard possibility of actor Arnold Schwarzenegger. Which is ultimately how she could help Gray. Republican leaders and potential funders might want to think twice about helping to qualify the recall if it would mean dumping one Democrat only to elect a stronger one. Not only that, if Feinstein became governor, she could appoint her successor in the Senate, potentially locking up that seat for a younger Democrat for years to come. Then again, the desire to dump Davis might be so strong among GOP activists that any thought of unintended consequences simply won’t matter.

PS. The LA Times’ Jean Pasco reported Saturday that the Orange County Lincoln Club has cut a check for $100,000 to the recall campaign and pledged another $150,000 from club members. Here’s the link. It requires registration, but you can use sign-on CaliforniaInsider and password Insider

Term paper limits

Erika Hayasaki, in the LA Times, provides further confirmation of the demise of the high school term paper. Some teachers blame new standards, saying there isn't time to teach the higher-order skill of in-depth writing amid the pressure to prepare for those multiple-choice tests. I'm skeptical. It seems as if the standards are being blamed these days for every ill that ails the schools. The culprit is more likely another factor offered in the piece. Many teachers say the kids they're getting in class can barely write a simple sentence. Forcing them to complete a 15-page research paper is hopeless, and a waste of time. Here's the link. It requires registration, but you can use CaliforniaInsider as a log-in and insider as a password.

May 16, 2003

Simon says

I just had a short chat with last year's Republican nominee for governor, Bill Simon, and he's hinting of throwing his name in the ring if and when the attempt to recall Davis qualifies for the ballot. He says he doesn't plan to contribute money to the effort for fear of becoming a "distraction." But he says he still wants to be governor. "I tried to recall him for two years," Simon told me.

Ose to retire

Republican Congressman Doug Ose, who'd been expected to challenge Barbara Boxer for the US Senate next year, instead will retire, he said in a letter to supporters today. Ose will step down after three terms in Congress, fulfilling a pledge he made when he first ran in 1998. He said he was quitting to spend more time with his family, but didn't rule out running for office again some day.
Although relatively obscure as a statewide figure, Ose was considered viable in the Senate race because he is a moderate Republican and he has family money to help underwrite a campaign. But as a congressman he has been somewhat enigmatic. He has tried to set himself up as a bridge between the very conservative John Doolittle and Democrat Robert Matsui. Instead, he just seems to get caught in their crossfire, especially on the pivotal Sacramento Valley issue of flood control. To me he always seemed to lack the passion you'd expect in someone eager to run for the Senate. I guess today's announcement more or less confirms that impression.

Shades of gray

The debate preceding the lopsided vote by UC Regents to oppose Ward Connerly’s Racial Privacy Initiative gave a hint of the scare tactics that lay ahead in this campaign. I’m not sure how I will ultimately come down on the measure, though by instinct I favor it. Connerly is clearly ahead of his time on this. The only question is whether he might simply be too far ahead. The man’s point is that it’s none of the government’s business whether I am white, black, brown, purple or something in-between. Besides, the multi-racial Connerly points out, many people don’t even know to which box they belong. His measure would generally prohibit the state from asking us to classify ourselves along racial and ethnic lines.

His core belief seems indisputable. The debate should focus on the practical effects of the measure, and whether it might hurt investigations of discrimination or have other consequences that outweigh its benefits. Well, it exempts the state’s anti-discrimination agency, the Fair Employment and Housing Commission. So that seems safe.

What about health care? Much of the discussion at the Regents Thursday centered on the measure’s effect on health research. UC professors argued that their science would come to a halt without racial data on patients. Lt. Gov. Cruz Bustamante, quoted in the San Francisco Chronicle, said Connerly’s measure would “hurt people and create tragedy in California.”

"Doctors and medical researchers might as well be wearing blindfolds" if certain racial data cannot be gathered, he said. "People with my heritage are more likely to be diagnosed with diabetes. HIV kills African Americans 18 times more than other Californians . . . White women have the highest rates of breast cancer. Diseases do not attack all segments of our population equally."

This certainly seems like a valid criticism. So I went to the text of the initiative, and right there is an exemption that looks as if it makes Bustamante’s slam moot:

(f) Otherwise lawful classification of medical research subjects and patients shall be exempt from this section.

Beyond that, the initiative allows the Legislature, with a two-thirds vote, to add exemptions deemed to be in the public interest. If somehow the one quoted here weren’t sufficient, does anyone believe that the Legislature would oppose using racial data for valid medical research?

I’m hoping the debate on this stays on the high road. It’s a vitally important question that speaks to the future of California as a melting pot and its government as truly color blind. But I fear that the debate, already focused on scaring people, will descend before long into racial demagoguery.

May 15, 2003

Holocaust as art

A couple of weeks ago when I wrote about the California Arts Council’s amazing ability to survive despite state budget cuts to essential services, I got a flood of reaction from folks testifying to the council’s invaluable contribution to the arts community. The council is not, these defenders insisted, a source of political patronage or a vessel for legislative pork-barreling. Now Gov. Davis has taken another whack at the council’s budget, and it’s interesting to see exactly how he structured it. Davis this week proposed cutting another $5 million from the council, bringing the total cut to 75 percent. But while he zeroed out the Artists in Residence and Folk Arts programs and nearly eliminated Arts in Education, Davis has preserved a $1.5 million grant to the Simon Wiesenthal Museum of Tolerance in Los Angeles. So while hundreds of the supposedly deserving small arts programs see their grants put at risk, taxpayer funding for one big, politically powerful museum that has a very valid mission but has nothing to do with the arts would be kept in tact. I think that pretty much speaks for itself.

May 14, 2003

Spend now, pay later

As expected, the gov’s revised budget pretty much represents a capitulation. His spread-the-pain January budget found no takers, so now Davis is taking the easy way out. He shifts his tax increases around, dedicating them for this and that, and reduces the level of budget cutting he is proposing. It looks as if the schools will get nearly enough to pay for enrollment growth and cost of living, and the harshest cuts in local government and health care have been taken off the table. But the real headline is the deficit spending. Davis is proposing a $10.7 billion deficit bond to be repaid over five years from a half-cent increase in the sales tax. After shifting all that debt off the books, he says his 2003-04 budget balances. But he concedes that the state will immediately be facing a new, $8 billion shortfall in the fiscal year that begins July 1, 2004. Davis and his finance director, Steve Peace, say they are proposing a path-of-least-resistance budget because they must have it in place on time or they won’t be able to do the borrowing they need to pay the state’s bills in July. But it’s a highly risky maneuver. If the Legislature passes Gray’s plan and then walks away, and odds are good that it will, the state will be right back into the fiscal soup, with the added burden of paying off the loan to finance a huge debt. As I’ve said before, this is like refinancing your house to pay off your credit cards and then charging your cards right back up to the limit. It’s also incredibly selfish and shortsighted. Californians will be paying for at least five years for our consumption of government services last year and this. And we still won’t have fixed the long-term problem. The whole thing is eerily similar to the energy bonds with which Davis put us on a path to pay for one year’s worth of electricity over 10 years. California needs to get real. Let’s either recognize what our services are costing and pay for them, or bite the bullet and reduce them. Unlike the feds, the state treasury can’t print money. But we can mortgage our future, and that’s what is being proposed here.

May 13, 2003

Davis to back car tax hike?

There will be few surprises left by the time the gov unveils his revised budget plan Wednesday morning. We already knew that he would be proposing a deficit bond in the $10 billion range, repaid over several years from a half-cent increase in the sales tax. This morning the LA Times confirms another widely held suspicion: Gray's new plan will also rely on the automatic triggering of the $4 billion increase in the car tax. The car tax hike will attract howls from Republicans but secret relief, because the fee will rise without a vote of the Legislature. If a handful of Republicans then support Davis on the deficit bond and sales tax hike, the 03-04 budget could be balanced with fewer cuts than Davis proposed in January. The 04-05 spending plan would still be out of whack, and that's the one to watch. More cuts or taxes will be needed to bring it into balance. Here is a link to the LA Times story. It requires free registration, but you can sign on with Username Californiainsider and Password Insider.

May 12, 2003

This sounds like a fairy tale but it's true

A must-read story from Kelly St. John at the San Francisco Chronicle, the tale of Oral Lee Brown and her adopted class of first-graders. Sixteen years ago, Brown told two-dozen first-graders at Brookfield Elementary School on the poor side of Oakland that she would pay their way through college if they graduated from high school. Earning $45,000 as a real estate agent, Brown began setting aside $10,000 a year in a trust fund to make good on her promise. In the end, 19 of the children graduated and entered college, many the first in their families to do so. This is more than just a heart-warming feature. It's a provocative story that tells us how lives change when our expectations rise, for whatever reason.

State-by-state revenue decline explained

Here's an interesting report from the Rockefeller Institute on how far state revenues have fallen during the current downturn. The governor's office is promoting it as evidence that Gray is not to blame for California's mess. And indeed, it does show that, except for Alaska, California had by far the largest percentage decline in tax revenues between 2001 and 2002. As has been exhaustively reported here, that's because of our dependence on the progressive income tax and the huge run-up in capital gains during the stock market boom. The report also shows how the revenue decline exceeded what you'd expect for the relatively mild recession we endured. Having said that, it doesn't excuse California policymakers, from Davis on down, for committing the entire windfall to ongoing spending and tax cuts, and from failing to react with any seriousness until long after the stock market had peaked and begun its tumble. Everyone knew where the money was coming from, and how quickly it could disappear. A little more prudence would have made the whole thing much easier to manage.

Watch the fine print behind Davis deficit plan

It’s almost certain now that the gov, in his revised budget Wednesday, will be proposing a deficit retirement plan in the $10 billion range, with a half-cent increase in the sales tax to retire the bonds. This is a version of the idea proposed a couple of weeks ago by Assembly Republicans, who want to move the deficit off-book and retire it over time out of existing revenues. Such a proposal from Davis would likely trigger a huge row over whether to pay off the debt with new taxes or out of existing revenues. But that’s not the most important issue. However the debt is eventually financed, it’s crucial that the rest of the budget be balanced with credible, conservative revenue projections and an honest outlook on expenditures. The worst solution would be to move this massive deficit off the books, then immediately start building a new one by continuing to spend more than is coming in from taxes. So while everyone is screaming about another Davis proposal to raise taxes Wednesday, look at the fine print and see what he proposes to do with the rest of the budget, and whether he offers projections out at least as far as his deficit finance plan extends.

May 9, 2003

State loses another 13,000 jobs

California’s unemployment rate remained steady at 6.7 percent in April, but the state lost another 13,100 jobs for the month, according to the Employment Development Department. Once again the only industrial categories adding any significant number of jobs were government, education and health care. Manufacturing dropped another 5,000 jobs (70,000 from a year ago) and the information and natural resource sectors also saw big declines in payroll.

Judge tosses SF homeless policy

A judge threw out San Francisco’s ambitious, voter-approved plan to reform aid to the homeless, ruling that only the Board of Supervisors, and not the people, have a right to make such policy. On the legal side, that seems like something of a stretch, since the Board ultimately answers to the people, and not the other way around. As for the policy, the decision is a shame. The city with the worst homeless problem in California, if not the nation, decided to experiment by giving aid to the poor in kind instead of in cash. The homeless were to get food and shelter and a reduced cash stipend to pay for incidentals. No one was going to lose their cash grant unless the services were provided. And the city, preparing to implement the program, was already rehabbing hotel rooms and ramping up drug treatment programs. Now all that’s at risk. Finally, the politics. Opponents of Gavin Newsom, the city supervisor who authored the measure and is running for mayor this year , are hoping this will trip him up. I think the opposite is true. Newsom’s measure was approved by nearly 60 percent of the voters. They are probably now more likely, not less, to want him in power to defend their interests and fight for programs that truly help the needy rather than simply protecting the interests of the social services establishment. Pending appeal, the Board of Supervisors will try to hash out a solution. The majority is clearly hostile to the Newsom model that was approved by the voters. Let’s hope they come up with something that does more than enable the drug and alcohol habits of so many of the homeless. That’s been the city’s policy for years and it clearly isn’t working.

PERS puts the hurt on taxpayers

New corporate tax measure filed

Lenny Goldberg's California Tax Reform Assn. has filed a proposed ballot measure with the Attorney General's office that would require annual review of all corporate tax breaks and place a five-year sunset on any new or expanded breaks passed after the initiative takes effect. It would allow the Legislature to repeal tax credits and deductions by a simple majority vote, rather than the two-thirds vote now required. Unless I am missing something, the measure appears relatively tame for the usually ambitious Goldberg, who has tried in the past to raise taxes on business and the wealthy. Any new money raised by repealing credits and deductions would be sequestered in a fund that would form a reserve to be drawn down only in an emergency or when revenues fail to grow enough to support a "current services" budget, meaning the status quo plus growth for population and inflation. Here is a link to the text of the initiative.

May 7, 2003

Racial, ethnic wage gaps persist

Interesting report out today on racial and ethnic wage gaps from the Public Policy Institute of California. The report concludes that wage gaps between California whites and Latinos have remained about the same for 20 years, while the gap between whites and blacks actually widened during that period. The authors, Deborah Reed and Jennifer Chang, attribute the difference between native-born white and Latino wages to education and occupation. In other words, if Latinos on average reached the same level of education and worked in the same fields as whites, their wages would be the same. Not true for blacks, who even with those adjustments, would still earn less than whites (84 cents on the dollar for men, 95 cents for women). One other point: Native-born Asian Americans, on average, earn more than whites.

52 ways to leave your wallet

Davis recall moves forward

The Capitol was protest central Monday as hundreds of Harley riders seeking repeal of California's mandatory helmet law converged on Sacramento while school groups rallied and then marched on the office of the governor's education secretary to protest pending cuts in expected school funding. But the event with the most potential long-term significance was the smallest, a gathering of about 150 souls in front of a fountain across from the Capitol's west steps. There, organizers of the drive to recall Gray Davis announced that they had collected the first 100,000 signatures needed in their drive to place the question on the ballot. While they are behind schedule if one uses a straight-line projection of signatures collected per day, the recall leaders say they are collecting more every day and expect the numbers to climb as they reach a critical mass of support. They will have to if the campaign is to get the required 897,000 valid signatures by the Sept. 2 deadline. And the urgency is even greater to get the recall on a special election ballot rather than combining it with the March presidential primary. Republican Rep. Darrell Issa, meanwhile, is on again in terms of financial support, with his reps telling the Bee that he intends to donate personal funds in the "low six figure" range to a new recall campaign committee. Other sources tell the LA Times (free registration required) that they think Issa can raise as much as $1 million from other contributors. If he succeeds, that money to hire paid signature gatherers, along with the leg work of hundreds of volunteers already committed to the project, could well be enough to finish the job. Soon the governor's fellow Democrats are going to have to start thinking about whether they will support him all the way or put their names on the ballot to replace him should he be removed from office. And that could prove to be a very interesting dance.

May 5, 2003

Recall supporters clear first milestone

Davis Recall organizers plan a noon press conference at which they say they will display the first 100,000 signatures needed to place the question on the ballot. Submitting the signatures is supposed to trigger a process by which county registrars begin verifying the names as they come in, with official updates on the totals at least monthly. Organizers are counting on those reports to fuel interest and give momentum to the drive. The deadline for collecting 900,000 valid names is Sept. 2, but recall proponents want to complete the task by July to trigger a special election. If they don't finish the job early, any election would probably be combined with the March presidential primary, where Democrats are expected to turn out for their contested race. I am beginning to question that conventional wisdom. Seems as if an historic attempt to recall the governor might actually trump the presidential primary in California, skewing turnout on its own. But there's still a long way to go before anyone needs to worry about that.

A car for $15.95 per day? Hardly.

We went through Las Vegas over the weekend to a wedding in Death Valley. Rented a car for $15.95 a day, unlimited mileage. When we returned the vehicle, the tab for less than three days was $89. Hmmm. OK, part of the cost run-up was the $25 refueling option. But other extras included $4.80 labeled "concession fee recovery" and $1.50 to process my airline frequent flyer credit. Huh? And then there was the 16.75 percent special sales tax on top of everything. I wonder if a rental car company could gain customers with an "honest rates" marketing campaign that boasted of no hidden charges. Kind of like some banks are doing these days. I know I'd give them my business.

Abuse in state's preference program for disabled vets

Excellent investigative piece Sunday by the Bee's John Hill, exposing abuse in the state program that gives disabled veterans preference in contracting. The game is for existing businesses to create fronts nominally run by disabled vets. Hill shows how this is done frequently in the business of leasing equipment to the state for fighting forest fires. I suspect the same was true among many minority or women-owned businesses in the era before Proposition 209 ended such preferences.

May 2, 2003

Tax receipts close to target

State income tax receipts for April, key to shaping the size of the growing budget shortfall, came in fairly close to projections. Total collections, including withholding and refunds, were about $470 million below the estimate of $6.35 billion. Bank and corporation taxes, meanwhile, arrived in amounts a bit above estimates, leaving the total tax take down by about $225 million in April. That's not good news for budget writers but represents barely a speck on the state's $70 billion budget balance sheet. Given revenue softness earlier in the year, plus spending pressure from rising program caseloads, expect the shortfall to grow by $1 billion to $2 billion when the gov revises his budget numbers May 14. The gap would expand by another $2 billion if Davis concedes that the last round of bonds borrowing against the state's tobacco industry litigation settlement won't be sold before the end of the fiscal year.

May 1, 2003

Half way there

Minimum wage for state workers?

In a decision expected to shape the length and political fall-out from any budget stalemate later this year, the state Supreme Court ruled today that state employees who work regular time during a budget impasse are entitled to no more than minimum wage until a new budget is adopted, after which they must be compensated in full at their regular wage level. Acting on a lawsuit brought by the Howard Jarvis Taxpayers Foundation, the justices ruled unanimously that state law prohibits the payment of employees without a budget or other appropriation. But the court also found that federal law requires the payment of at least minimum wages, and of full wages plus overtime to workers who put in more than a normal full workday. How this will play out is unclear. Controller Steve Westly, whose department cuts the paychecks, has said his computers can't separate the regular payroll into employees who work overtime and those who do not. The court, essentially, said Westly’s potential logistical nightmare wasn’t its problem. In any case, the decision is likely to ratchet up pressure on lawmakers and the governor to resolve the budget by the July 1 start of the next fiscal year. Either that or pass separate legislation continuing this year’s appropriation for payroll on a month-to-month basis until a budget agreement is reached. Here is a link to a PDF file containing the court's opinion.